BP gets ball rolling on plant

Kenai contractor hired to help build GTL pilot facility

Kenai and Houston businesses will team up to build the latest addition to the Nikiski industrial area.

BP Exploration Alaska has selected Kenai-based Udelhoven Oil Field Services Company and Houston-based Austin Industrial to build its $86 million gas-to-liquids pilot facility.

"While folks have seen progress at the site the last few months, the awarding of these contracts will really be a catalyst for major construction at the site," said Ken Konrad, vice president for BP's gas operations in Alaska. "It's going to be a busy 12 months."

Groundwork is expected to begin in early February, with a peak work force of up to 200 people.

"Both Udelhoven and Austin have a real solid commitment to use the local labor force," Konrad said. "We're really confident there is the skilled labor in the area to carry out this job."

Jim Udelhoven, major stockholder of Udelhoven Oil Field Services Company, said his company will be hiring 35 to 40 people to install and test the electronic instrumentation equipment that will monitor every aspect of the plant's operation.

"This is how we started on the peninsula 30 years ago," Udelhoven said. "My people are really excited for this opportunity."

Udelhoven will be involved in construction from the beginning, running conduit that goes up with the building frame, progressing to installation of the instrumentation and then testing it.

"Instrumentation measures the temperature and pressure (of the system) and sends that information to computers that monitor and start and stop pumps and compressors, whatever we need to control," Udelhoven said. "It's something along the lines of electrical work, but more intensive and much more complex."

Joe McKee, vice president of field operations for Austin, said the Texas company will hire between 120 and 140 heavy equipment operators, carpenters, machinists, iron workers, millwrights, pipe fitters and welders to construct the 10-story-tall facility.

"We're going to bring up some supervisors that have worked with the company for a long time, but we're meeting with Job Service and the college about how people can become part of this project," McKee said.

Austin specializes in heavy petroleum and oil refinery construction, though McKee said this is the company's first job in Alaska.

"Most of our cold weather expertise will come from working with Mr. Udelhoven and the local people we hire," he said.

"This is an opportunity of broad proportions, and we're glad to be here and have the opportunity to become an active part of the community," he added.

Konrad said the 5-acre facility will be designed to exacting standards, despite the fact it may be torn down some day, since the GTL plant is only a demonstration project.

"Quality is the foremost thing in our mind," he said. "Given that it's a demo unit, we're all very keen to make it work the first time."

Konrad said the longevity of the site may depend on how successful the GTL pilot goes and to test second and third generation GTL processes there.

"It will play out over the next several years and will operate as long as there is scientific value to be had," he said.

Konrad said there has not been a decision where to locate a full-scale GTL plant, if the pilot works, but he said the company is looking at the North Slope.

BP's gas-to-liquid technology would take natural gas and turn it into synthetic crude oil, which can be transported alongside North Slope crude oil in the trans-Alaska oil pipeline and processed in oil refineries. GTL is one of a number of options the company is exploring to make large-scale North Slope gas sales commercial.

The Nikiski demonstration facility will convert about 3 million cubic feet of Cook Inlet natural gas, or methane, into about 300 barrels of synthetic crude oil a day. It is scheduled to come on line in the spring of 2002.